NEW DELHI: A Supreme Court (SC) order asking the Delhi government to ban registration of new diesel vehicles till March 31, 2016, triggered mixed reaction on the auto counter in Wednesday’s trade amid firm trading in the broader market.

In a bid to put a check on rising pollution in the national capital, the apex court ordered a ban on diesel vehicles older than 10 years, while allowing only non diesel-powered taxies to ply on Delhi roads. Non Delhi-bound trucks registered before 2005 would also be barred from entering the capital, the court said.

In its order, the apex court said all taxis plying on Delhi roads will have to be converted to CNG by March 31 and set the same deadline for the taxi aggregators too. The court also hiked the pollution tax on commercial vehicles entering Delhi to Rs 1,400-2,600.

Shares of M&M tumbled 6.07 per cent to hit a low of Rs 1,210.80 and were on course to record its biggest single-day percentage loss since a 6.21 per cent drop recorded on August 24, 2015.

“There will indeed be a sentimental impact on M&M, as there is hardly any non-diesel vehicle in its portfolio. Sales of diesel vehicles in Delhi are just about 2-3 per cent of its total sales. That said, the order will raise fears that more cities, say Chennai or Bangalore, may resort to similar curbs. The stock recently hit its 52-week high and we see some profit taking ahead, which could take it below the Rs 1,200 mark in the short term,” Prakash Diwan, director at Altamount Capital, told ETMarkets in a telephonic interview.

Most of M&M models, including Scorpio, Xylo, XUV500 and Bolero, are powered by diesel engines of more than two litres.

Diwan expects Maruti Suzuki to be the key beneficiary of the move, as it has a mixed portfolio of petrol and CNG cars in its portfolio. At 12 pm, Maruti Suzuki shares were up 0.38 per cent at Rs 4,634.15.

Tata Motors gained 1.04 per cent to Rs 383.25. Though Tata Motors has a large diesel car portfolio, the company may not see any material impact from the SC order as it is now more of a global play, Diwan said.

Gaurav Dua, head of research at Sharekhan, echoed similar views. He said while it is difficult to judge the exact impact of the SC ruling on M&M, sentimentally it will be a big negative for the stock.

But unlike Diwan, Dua does not see any significant boost to Maruti.

“We have been bullish on Maruti for long and have remained so. Other than it, we like Ashok Leyland as the pure domestic play on commercial vehicle side. We also like HeroMotoCorp as we expect rural demand to improve going ahead,” Dua said.

Shares of Ashok Leyland, Hero MotoCorp and Eicher Motors rose between 1.43 per cent and 1.62 per cent on Wednesday.

“We believe the news is likely to have a negative impact on M&M, as about 95 per cent of its passenger vehicle portfolio is above the 2,000cc range. The news would not have much impact on Maruti Suzuki, as it hardly has any product above the 2,000 cc segment, and also Tata Motors, whose volumes are driven largely by JLR,” brokerage Angel Broking said in a note.

Diwan said the inventory of diesel-powered automakers would rise due to the three-month ban. "Auto firms will need to shift that inventory to other cities and there could also be some discounts as well,” he said.

“We think the auto industry is likely to have negotiations/dialogue with the government and provide a permanent solution, which could lead to banning of the older vehicles (which have more population and are relatively more polluting) or further improvement in emission standards for new vehicles, which could then possibly result in the ban not extending beyond March 31, 2016,” the brokerage said. Delhi is the largest passenger vehicle market in the country with a 7 per cent share. For luxury cars, Delhi accounts for 18 per cent of nearly 38,000 luxury cars sold in India annually. Of this, almost 80 per cent are diesel vehicles. More than half of them have a capacity below 2 litres.